Australia asks its biggest investors to help fix housing crisis
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AUSTRALIA’S government is seeking to partner with the nation’s A$3.3 trillion (S$2.97 trillion) pensions industry and other institutional investors to build more affordable rental housing.
The government will spend A$350 million on helping to build 10,000 homes over five years from 2024, according to a statement released ahead of Tuesday’s (Oct 25) federal budget. The funding aims to incentivize some of the nation’s largest investors to back the projects by covering the gap between market and subsidised rents.
“Relative to comparable countries, Australia has a low level of institutional investment in housing,” the government said in its National Housing Accord policy document. “At the same time, we have the world’s third largest pool of capital in our superannuation system, which is hungry for investments that will deliver stable returns over the long term for the benefit of members.”
Sky-rocketing rents in one of the world’s frothiest housing markets mean many Australians are struggling to find somewhere suitable to live. Government data shows the national vacancy rate is at a record low of 0.9 per cent, while advertised rents in capital cities soared 10.2 per cent in the year through to September.
The government’s proposal defines affordable housing as properties that are provided at below-market rent to qualifying tenants. It’s secured support from state and territory governments, according to the statement.
The policy document said zoning, planning and land release would be “expedited” in locations around train stations and near education and training facilities, with reforms to make housing supply “more responsive to demand” over time.
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The plan “will align for the first time the efforts of all levels of government, institutional investors and the construction sector to help tackle the nation’s housing problem”, Treasurer Jim Chalmers and Housing Minister Julie Collins said in the joint statement. “Our shared ambition is to build one million new well-located homes over five years from 2024.”
The government had previously announced a new investor round table, which includes leaders from some of Australia’s largest pension funds, major banks and global asset managers. It will meet for the first time next month.
“I’ve been talking to superannuation sector and institutional investors and state governments for some time now about how we try and deal with the supply issues in our housing market,” Chalmers said in a recent interview with Bloomberg. BLOOMBERG
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